Strategy and Governance Flashcards

What is the balanced scorecard's learning and growth perspective primarily concerned with?

Answer: Building the organizational capabilities, employee skills, and information systems needed for long-term success

The learning and growth perspective focuses on the intangible assets that drive future performance: employee capabilities and training, information system capabilities, organizational culture, alignment, and knowledge management. It is the foundation for achieving goals in the other three perspectives.

In strategic risk assessment, what is a key risk indicator (KRI)?

Answer: A metric that provides an early warning signal of increasing risk exposure in a specific area

Key risk indicators are forward-looking metrics that signal increasing risk exposure before a risk event materializes. They differ from KPIs (which measure performance) by focusing specifically on emerging risks, enabling proactive risk management responses.

What is the main purpose of a corporate sustainability strategy?

Answer: To integrate environmental, social, and governance (ESG) considerations into business strategy for long-term value creation

A corporate sustainability strategy integrates ESG factors into strategic decision-making to create long-term value for all stakeholders. It addresses environmental stewardship, social responsibility, and governance excellence as sources of competitive advantage and risk mitigation.

In the Ansoff growth matrix, what does a market development strategy involve?

Answer: Selling existing products in new markets or to new customer segments

Market development involves taking existing products or services into new markets. This could mean geographic expansion, targeting new customer segments, or finding new distribution channels. It differs from market penetration (existing products, existing markets) and product development (new products, existing markets).

What role does the internal audit function play in corporate governance?

Answer: It provides independent and objective assurance on the effectiveness of risk management, internal controls, and governance processes

Internal audit provides independent, objective assurance and consulting services to improve governance, risk management, and control processes. It reports functionally to the audit committee and administratively to senior management, maintaining independence from the activities it evaluates.

A company faces a strategic choice between organic growth and acquisitive growth. What is a key advantage of organic growth?

Answer: It maintains organizational culture consistency and avoids integration risks associated with acquisitions

Organic growth (growing from within through internal development) maintains cultural consistency, avoids the significant integration risks and costs of acquisitions, and allows for more controlled, sustainable expansion. However, it is typically slower than acquisitive growth.